Litecoin Explained for Beginners

written by David AmoyalPublish date: 01/06/2018(Last updated: May 09, 2018 08:55 AM)

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Based on blockchain technology and one of the original cryptocurrencies, Litecoin is a universal, peer-to-peer payments network that follows an open-source, decentralized protocol. Initiated by ex-Google employee Charlie Lee and released on GitHub in October of 2011, the Litecoin project bases its foundings around the technical details of Bitcoin. While similar to Bitcoin in various aspects, it was created to solve many of the issues centered around Bitcoin.

Article Summary

Based on blockchain technology and one of the original cryptocurrencies, Litecoin is a universal, peer-to-peer payments network that follows an open-source, decentralized protocol. Initiated by ex-Google employee Charlie Lee and released on GitHub in October of 2011, the Litecoin project bases its foundings around the technical details of Bitcoin. While similar to Bitcoin in various aspects, it was created to solve many of the issues centered around Bitcoin.

A notable difference is that Litecoin reduced the average block time, ultimately making transactions quicker and less costly than its predecessor. Ultimately, it aims to be used to pay for everyday items instantaneously. In May of 2017, Litecoin became the first major cryptocurrency to use the Lightning Network (which relies on Segregated Witness) for a transaction sending 0.00000001 Litecoin to San Francisco from Zurich in a fraction of a second.

Litecoin Basics

To understand Litecoin, it helps to understand the technology of Bitcoin, as Litecoin is a fork of the “Bitcoin Core Client”. Differences include using different hashing algorithms (Bitcoin’s Sha-256 vs. Litecoins scrypt), a quadrupled amount of coins that can be mined with Litecoin (21 Million vs 84 Million), and the key fact as stated before that it takes an average of 10 minutes to process a block with Bitcoin, compared to roughly 2.5 minutes with Litecoin.

Litecoin Open Source

Litecoins open source application, released under the MIT/X11 license, allows users the ability to distribute, “run, modify, and copy the software”. Transparent in nature, the software allows for “independent verification of binaries and their corresponding source code.”

Basically, this means that it is publicly accessible and anyone is able to examine and tweak the source code, thus supporting transparency and collaboration for community-minded projects. In general, most software is “closed source” and only able to be modified by one entity, such as a by the person or corporation who designed it.

Litecoin Mining

Mining is an integral part of the cryptocurrency ecosystem, a process that allows for the steady release of Litecoin following the solving of complex mathematical algorithms. While different currencies allocate different rewards, Litecoin’s mining award is currently set at 25 new Litecoins per block (formed approximately every 2.5 minutes). To put this value into a USD perspective, that is roughly $6000 to solve a block.

Because the process is extremely difficult, a reward is given to guarantee the supply of miners who will secure the network. To slow inflation, the Litecoin network will cut the reward in half every four years. The Litecoin network is scheduled to produce 84 million Litecoins, which is four times as many currency units as Bitcoin.

Litecoin Advantages

One of the key benefits of Litecoin is that its blockchain is able to handle a much larger volume of transactions compared to its predecessor. As well, as a result of speedier block generation, the protocol backs the fulfillment of more transactions and does not need future modification.

Currently, Bitcoin is tackling a process of attempting to implement SegWit to decrease costly customer transaction fees and increase transaction capacity. Therefore, as a functioning currency, Litecoin is clearly advantageous.

How to Buy Litecoin?

Since Litecoin is one of the top currencies and one of the oldest cryptocurrencies out there, you can buy Litecoin on major exchange sites such as Coinbase and Bitstamp using conventional payment methods (credit cards, bank wires). At the time of writing, Litecoin’s price was $251.17, a dramatic increase from previous months. We can see the nearly 2.5-fold increase (150%) from just one month prior to December 2, 2017, when the price was sitting around $10.

How to Trade Litecoin?

You are able to trade Litecoin on sites such as GDAX, Bittrex, Binance, Kraken, and Bitstamp under the LTC symbol. If you’re seeking to trade Litecoin for altcoins, your best bet is to purchase them on reputable exchanges and deposit them into respective Litecoin wallets on a low-fee trading site like Binance.

If you simply wish to buy and invest long-term, or as the crypto-community likes to say HODL (hold on for dear life), then purchasing on exchanges and simply leaving them on sites like Coinbase is fine.

How to Store Litecoin?

A Litecoin wallet is somewhere that lets you store your Litecoin digital assets. Below are some wallet storing options.

For large amounts, you may want to consider purchasing a hardware wallet to secure your digital assets from an attacker. For a cheaper yet extremely secure alternative to hardware wallets, you can consider using paper wallets. However, they can be risky if you don’t know what you’re doing.

Conclusion

Charlie Lee came into recent headlines upon recent sale of all of his Litecoins. In a post on Reddit, Lee explains that the sale was simply due to a “conflict of interest”. Lee stated “Whenever I tweet about Litecoin price or even just good or bad news, I get accused of doing it for personal benefit. Some people even think I short LTC! So in a sense, it is conflict of interest for me to hold LTC and tweet about it because I have so much influence.”

While the rationale for his decision makes sense, many in the crypto-community saw this as an attempt to reap the rewards of an escalated coin price before the “bubble bursts”, as many cryptocurrency critics claim will eventually occur.

Even with all the doubt surrounding the Litecoin teams intentions after this statement, it is not unreasonable to foresee a strong use case for Litecoin. Clearly more practical than Bitcoin due to its enhanced scalability and transaction speeds, one can only hope for the success of a coin like Litecoin for the future of low-fee, decentralized payments.

Table of Contents Article SummaryLitecoin BasicsLitecoin Open SourceLitecoin MiningLitecoin AdvantagesHow to Buy Litecoin?How to Trade Litecoin?How to Store Litecoin?Conclusion The past two years have…